LVTFan's Blog

Congressman Maguire's speech on Chinese Exclusion - October 13 & 14, 1893 --- and the remedy

This is a very long speech; it stretched over 2 days.  It was occasioned by discussion of legislation on Chinese exclusion.  James G. Maguire (1853-1920) represented San Francisco in Congress from 1893 to 1899.  Georgists are acquainted with him in part because of his writings in The Standard, Henry George's weekly newspaper, including the 1887 speech to the Anti-Poverty Society in NYC in which Judge Maguire spoke of seeing the cat, which soon became a shorthand for that AHA! moment when one starts to see the full beauty of Henry George's ideas. 

I've seen parts of this speech in various places, but don't always see what I think is the most important and remarkable part of it.    

The situation Congressman Maguire describes in San Francisco is dramatic, and one can see why explaining the situation to his mostly East Coast colleagues in Congress was a challenge. 

In the district which I represent there is a vastly greater number of adult Chinese male population than of adult males of the Caucasian race, citizens and aliens combined. That is the situation there. That was true of the whole city of San Francisco, according to the statistics, until quite recently. I believe it to be the condition in San Francisco now. I believe the census returns of Chinese population in San Francisco to be wholly and grossly inaccurate.

At the end of the first section, we get a hint of where the speech is going.

You see the hardships imposed by our Federal laws upon the Chinese, and your sympathies go out to them because you do not see the other side of the picture. We see the oppression, misery, degradation, and slavery to which our own laborers are reduced as a direct result of Chinese immigration. We see that the imported Chinese coolies are mere agencies in the hands of monopolists—domestic and foreign—by which our own people are gradually reduced to a condition of wretchedness approximating to the social condition of the Chinese slaves, and without the slightest feeling of malice against the unfortunate Chinamen we demand their exclusion and their deportation as necessary measures of defense to our own people.

A "Fighting Leaflet" from another time and place, relevant today

From an 1899 newspaper:

FIGHTING LEAFLET OF THE SCOTTISH ASSOCIATION.

The Scottish Liberal Association has just issued the following as a fighting leaflet, written by Mr. Edwin Adam. M. A., vice-president of the Scottish Land Restoration Union:

The Taxation of Land Values and Social Problems. Lower Rent. Higher Wages:

Why are house rents so high, and the accommodation so bad? Mr. Joseph Chamberlain told us that a good three-roomed house could be built for £150, but that, unfortunately, did not include the cost of the site. It remains a "castle in the air.” The Edinburgh Town Council can borrow money at 2½ percent, and yet it makes a loss in giving one-roomed houses at £6 10s a year.

Because the cost of the land is so enormous. This is the opinion of the Royal Commission on the Housing of the Working Classes. Building and land in and around Edinburgh is feued from £40 to £200 an acre, and sells at from £1,200 to £6,000 an acre. Eight thousand pounds has just been refused for seventy yards of ground which the city of Glasgow wished to acquire for widening the corner of Buchanan street.

The remedy is to put a tax on the land value, whether the owner allows that land to be used or not.

Taxation of land values means putting a tax on the value of the land apart from the value of any improvement placed upon the land by the occupier’s industry. It would put the tax on the site, and not on the house built upon it.

The present system of local rating puts the tax upon the improvement— the better a man uses the land the more tax he has to pay. The less he uses the land, the lower the use he makes, or allows other to make of the land, the less he contributes to the public expenditure. This enables him to hold it idle, and wait for the rise in its value, which will result from the continued growth and expenditure of the community, to which he has contributed nothing.

We wish better houses and more houses. The present system permits the man who refuses to allow building on his ground to go free: puts the rates on the man who builds. This is unjust.

When Jenner's shop in Princes street, Edinburgh, was burnt down, the site was worth £100,000. Had the owner resolved not to rebuild, he would have paid no rates, but the value of the site would have continued to rise, because of the continued increase of population and public expenditure. He, however, not only rebuilt, but spent some £95,000 in making the building an ornament to the town. He is therefore rated on £7,000, which represents the annual value both of the site and of the £95,000 spent on the building. The new system would rate him on the value of the site, say on £4,000 a year, whether he rebuilt or not, and would leave him to enjoy all the value of the building.

Let owners of land pay their rates on what they say their land is worth. This would compel them either to use it, or let others use it, at its present market value.

Would a slum proprietor be able to demand a fancy price for his houses which have been closed by the sanitary authority, if he had to pay rates on that fancy price?

Would the Duke of Buccleuch have been able to hold out for £120,000 for 100 acres of almost barren foreshore and a flooded-out quarry, which Edinburgh required for gas works, if he had to pay rates for that, and all the similar land he holds on a value like that?

Would sites for the Usher Hall in Edinburgh be quoted at fancy figures if the owners had to pay rates on what they say is the selling value of their property? Why should they be allowed to name one value for rating, and an enormously greater for selling? The North British Railway Company refused £65,000 for the Canal Basin. That stands in the valuation roll at a rental, which represents a capital value of only £30,000.

Taxation of land values is a just system of taxation. It puts the burden of public expenditure on those who ultimately benefit by that expenditure.

It merely takes for the municipality a portion of that value which is created by the work of the municipality.

It would discourage idleness among land owners, and force them to use the land or let others use it, at its present market value.

It would not, like the present system, only rate a man according as he used and improved the land, but would leave to every man the full value of his own improvement.

It would encourage building. More houses and better houses would be built. It would therefore lower rents.

We should have land owners asking builders to come and build; they would be advertising for laborers, and not the laborers be begging for employment. It would therefore raise wages, and the conditions of labor would be improved. Monopoly would be taxed and industry would be free.


reprinted in the Oakland Tribune, 1899-03-25, in Pomeroy's single tax column

Single Tax Challenge

This appeared in the San Francisco Call 1898-10-12.  The claims he makes for the Single Tax start with one to which many 21st century folks would at first hearing, think "non-starter."  But I urge you to think further, and think about what expensive land means to most Americans, and how it makes the lives of some -- many! -- very difficult, while greatly enriching a "lucky" few.   A reform which "cheapens" land will go a long way to putting millions of people to work and self-sufficient.

SINGLE TAX CHALLENGE.

Editor Call: So repeated have been the attacks and misrepresentations of the single tax theory in The Call and other papers of late that, as a member of the Alameda County Single Tax Society, I feel bound to request the liberality of your paper to make a few pertinent propositions.

As single taxers many of us regret the action of the Republican party in their State convention in inserting an anti-single tax plank In the State platform. Such action will force many single tax Republicans in this election to vote against their own party.

It is not, however, of such vital interest to single taxers as to which political party is for or against the single tax as it is that the theory of Henry George should be understood and intelligently discussed. Up to the present editorials have been woefully at sea in the presentation of the single tax proposition, and naturally the deductions have been equally erroneous, and platform speakers also seem wretchedly ignorant of what the single tax: is and what the results of its adoption would be. General Barnes contents himself with calling it names; Mr. Gage says it is a proposition to tax realty and improvements only.

Now, in order to test the knowledge and encourage the exercise of thought on the part of random writers and ravers, and to put the subject squarely before the people—in other words, in order to give the single tax a fair, square hearing—I make the following claims for the single tax and challenge denial or adverse argument. The single tax would:

First    —       Cheapen land.
Second    —   Would encourage industry.
Third     —     Discourage speculation.
Fourth    —    Raise the wages of labor.
Fifth       —    Increase the earnings of capital invested in industry.
Sixth        —   Reduce the California farmers’ taxes to a quarter of the present tax they pay.
Seventh    —   Prevent one man living off another's labor, except by charity.
Eighth    —     Destroy monopoly.
Ninth    —      Abolish the "lobby.”
Tenth    —      Raise the wages to the full product of labor.
Eleventh—     And could not be shifted.

It seems to me that the above is a fair target for anti-single taxers. The only difficulty the antis will have will be to keep the thought out of their answers. When an anti-single taxer begins to think he is in danger, and if he keeps on thinking, he is lost to the antis and becomes as rabid as any of us.

Trusting that you will give your anti-single tax editor, orators and readers an opportunity to confute the above statements, and also permit reply. I am, sir. 

EDGAR POMEROY
Oakland, October 10.

Bengough: The Declaration of Independence Vindicated

This appeared in Single Tax Review in Autumn, 1905.

THE DECLARATION OF INDEPENDENCE VINDICATED.
(For the Review.)
By J. W. BENGOUGH.

There are some people in the United States who take the position more or less openly that the Declaration of Independence is an out-worn document; that whatever its practical merits may once have been, it is now no more than a cherished relic having certain spectacular uses on Fourth-of-July occasions. There are other Americans—constituting the vast majority—who regard such sentiments as savoring of blasphemy, but who, nevertheless, are ardent supporters of the prevailing policy of Protection. The real difference between these two classes of citizens is merely this: That the one consciously repudiates the Declaration, and the other virtually does so.

The fundamental doctrine of the Declaration is that "All men are endowed with certain inalienable rights, amongst which are life, liberty and the pursuit of happiness.” The meaning of this is clear enough. The fathers undoubtedly intended to assert that whatever the duties of men might be in civilized society, however they might differ in mind, body or estate, all alike were entitled to the enjoyment of certain natural rights, which rights were inalienable—that is, could not be justly taken away, curtailed or invaded by any human power, so long as they were exercised by each man with due respect for the similar rights of every other. Amongst these rights three are enumerated: The right to Life, involving necessarily the right of access to food, clothing and shelter, the right to Liberty of mind and body, so that a man’s ownership of himself might be vindicated, and his powers applied to the securing of the things necessary to life; and the right to the pursuit of Happiness, the freedom to move about and to hold such relations with his fellow men as would conduce to the enjoyment of a full and harmonious life.

The writers of the Declaration had but recently experienced the tyrannical power of taxation, and it might almost seem that the weapon of unjust taxation, like Macbeth’s dagger, was floating before their mental vision when the memorable words above quoted were penned. For certainly there is no more effective way in which man’s right to life can be abridged than by levying taxes upon the results of his labor; and his right to liberty, and the pursuit of happiness can be abrogated in no way more surely than by means of a system which interferes with his impulse to trade.

Terrence Powderly: On Earth Peace, Good Will Toward Men (Cosmopolitan, December, 1891)

 

"ON EARTH PEACE, GOOD WILL TOWARD MEN."

T. V. POWDERLY.

Terence V. Powderly was born January 22, 1849, at Carbondale, Pennsylvania. His parents were natives of Ireland and were honest hard-working people.The boy's school days ended at the age of thirteen.  At fourteen he was examiner for the Delaware and Hudson Canal company: at seventeen he was apprenticed in the Delaware, and Hudson shops to learn the trade of machinist; at twenty he was a machinist in the locomotive shops of the Lackawanna railway at Scranton, and in 1871 joined a labor organization.  Two years later, in spite of the fact that he was a Conservative, he was discharged from the shops because of his activity in the labor union.  He worked at his trade wherever he could find employment notwithstanding the "black list" until 1878, when he was elected Mayor of Scranton, an office he retained for six years. He has been a chief factor in organizing the Knights of Labor, whose General Master Workman he has been since 1879.

IT is easier to point out the wrong than rectify it, less difficult to find something to condemn or find fault with than praise or endorse; and in the field of industry, while the advance toward better conditions has been more rapid during the past decade than for centuries before, the results are not so apparent to the worker in the field as to the looker-on. The great danger which presented itself to the people fifteen years ago was the law. The poor were without friends: they were the recipients of denunciation from statesman, press and pulpit. It was considered rude to even hint that the man who soiled his hands in manual toil had a right to any consideration other than a patronizing kindness at the hands of his employer, and to suggest that others should take an interest in his welfare was to incur the displeasure of society. The law made it a crime to be idle and gave to employers the privilege of turning the workman away without protest. To be out of money and on "tramp" was an offense against the law: it is today, but is not punished so rigorously as it used to be.

Saving for Retirement

It is worth considering that one of the reasons that people are having more difficulty saving for retirement now than they did, say, 10 or 20 or 30 years ago, is that housing costs are absorbing a larger portion of their wages than used to be the case.

And I'm rather sure that if one looked at the sum of their housing and commuting costs as a percentage of income, that, too would have risen significantly.

The old rule of thumb was to spend no more than 1/4 of one's income on housing.  I assume that was construed to include not just the rent or mortgage payment, but also property taxes, condo or association fees, homeowner's or renter's insurance, heating fuel, and utilities such as electricity, water, sewer and telephone.  That was probably before TV was a monthly bill, and before an internet connection became, if not essential, nearly so.  And it may have been before borrowing more than 80% of the purchase price became common, adding in costs for private mortgage insurance, costing 0.32% to 1.2% of the loan principle.  It doesn't take into account the likely costs of maintenance, sometimes estimated at a few percent of the house's value.

Thirty or forty years ago, one couldn't get a standard mortgage whose payments, plus property taxes and homeowners' insurance, exceeded 28% of gross income, or take on a mortgage when the sum of those costs and other debt service (credit card, student loans, car loans) exceeded 35% of income.

Today, according to the Consumer Financial Protection Board, "Qualified Mortgages" generally don't exceed a debt-to-income ratio of 43%.   But that doesn't appear to include expenses for utilities.

Having One's Cake, and Eating it Too

A bit in the Philadelphia Inquirer of 1931-09-08 signed by Girard, describes an interesting point made by Harold Sudell:

"According to Harold Suddell, noted single-taxer, Herbert Spencer and I have made the same mistake.

I do not know if Herb would feel more foolish than I at this comparison.

Mr. Sudell insists that land is one thing which knocks cockeyed the old theory that you cannot eat your cake and have it.

While land grows in value it may also yield a good rate of interest on the investment.

In that way it beats plain, old fashioned compound interest.  But, as Mr. Sudell says, if he had his way -- the way of all single-taxers -- all that land would get would be what it earns, never that potential "unearned increment," about which Henry George grew so eloquent.  

Which policy, of course, would forever end any possible speculation in land.  What would Miami do then for a living?

And there is no such thing as a free lunch ... when it comes for free, it is coming from someone else's labor.

Land Basis to All Business, and Machine Age and Land Value

Exploring some old newspapers, I found a letter to the editor that I thought was a nice simple expression.  It was written by someone named Warren T. Lowe, of Media, PA, in 1930.

Land Basis to All Business

To the Editor of the Inquirer:

Mr. W. M. G. in criticizing my letter intimates that land can be used only for farming.  Many people make this error.  All business propositions use land.  All activities of life have it as their basis.  We use it before birth, after death and every instant between these events.

We stress value instead of area.  A farm of one hundred acres employs a few men; one acre, in the center of a large city, may employ a thousand.  There is a natural value of land due to the advantage one parcel has over another; there is also an artificial value due to speculation.  As business expands the latter rises until it permeates the whole structure, when it chokes further progress and is followed by business stagnation.

Henry George discovered the remedy, viz., Take in tax the annual ground rent, thereby killing speculation; then remove all other taxes, thereby giving the greatest "boost to business" it ever had.

---

And that same year appeared another LTE from the same fellow:

Machine Age and Land Values

To the Editor of the Inquirer:

Your correspondent, "Jersey" makes some good points, but with one of them I would differ.  Instead of the advantage of efficiency in the use of machinery going to owners of machinery it goes to the landlords, which is shown in the following three examples:

(1) Henry George was asked by a man, "If I owned all the money and you owned all the land, what would you do?"  Ans. "I would say to you, give me all your money or get off the earth."  He could have used marchinery or any other form of capital instead of money with the same result.

(2) Henry Ford put out a tractor which displaced eight horses and three men on the farm.  There were 900,000,000 acres of land below the margin of cultivation which this transaction raised above it. Did it raise wages? No; it raised the rent and selling price of that land.

(3) In the early days of California, wages of labor were $500 a month and interest on capital 24 percent; rent was nothing.  Today wages are but a fraction of that; the Government sells bonds for less than 3 percent; gilt-edged securities bring 4 to 5 percent interest; but rent is measured by the hundred millions.

11 Taxing Questions, from 1916

Making ’Em Think

Editor of Reedy's Mirror:

The State of California has a Tax Commission, which, unlike most tax commissions, is disposed to study the question of taxation. It is agitating the subject of taxation by asking the people questions. Here is a list of eleven questions it has just propounded to the people of this State:

Would you favor the exemption from taxation of all factories and manufactured products? (Effort is being made along this line in several States, particularly New Jersey.) Give reasons.

If most of our public revenue continues to come from property taxation, do you believe any property should be exempt from paying in some way, its percentage of such tax? If so, what property would you exempt?

Would you favor the discontinuance of the tax on personal property and the adoption of a reasonable income tax in its place? (This has been recommended by various tax commissions, and has been partially put into operation in Wisconsin, and recently adopted in Massachusetts.) Give reasons.

Do you believe improvements on land (houses, trees, etc.) should be taxed in the same proportions as the land itself? Give reasons.

Do you favor the gradual reduction of taxation upon buildings, trees and vines and the assumption of that tax burden by the land? Give reasons. (This proposition has been discussed in New York and other States, and attempted in Canada, New Zealand, and elsewhere. It is estimated that land in California is assessed at about one-half its full value, and it has been argued that if it were assessed at full value, improvements could be exempted without increasing the tax rate.)

It is argued that land values in cities and other social centers are greatly augmented by the amount of population, and that the community itself, and not any effort on the part of the owner of the land, gives it the high value. If this is true, do you, or do you not, believe that a man who gains this extra wealth from the community, instead of by his own efforts, should pay a greater tax proportionately? Give reasons.

If you state in your answer to the preceding question that you are in favor of a greater tax upon unearned land values, then what percentage of this unearned value do you believe should rightly come bark to the community, instead of being retained by the owner? Give reasons.

Do you believe that land held for speculation should be taxed heavier than the land used for home, agricultural or business purposes? Give reasons.

Do you favor the idea of setting aside certain classes of property to be taxed for certain purposes (for instance, for State or county purposes solely) without regard to the relative burden of tax borne by the different classes of property? Give reasons.

Do you favor classifying property according to its earning ability and taxing it in proportion to that ability? Give reasons.

Do you favor a system of indirect taxation for city and county governments, similar to that now used by the State? Give reasons.

Such questions as these are likely in time to have disturbing results to entrenched privilege. They are calculated to make the people think, and that is always unfortunate for those who profit by popular thoughtlessness. If a man thinks long enough and hard enough he is likely to get back to the beginning of the subject. He is likely to become a convert to the Single Tax.

The Forty-Niner.

San Francisco, Cal.

This letter to the editor appeared in Reedy's Mirror, a weekly newspaper published in St. Louis, August 25, 1916.

James Maguire's speech in the House of Representatives: 1893-10-13 LAND MONOPOLY AND THE LABOR QUESTION

https://archive.org/stream/calspeech1906unse/calspeech1906unse_djvu.txt

LAND MONOPOLY AND THE LABOR QUESTION.
The Honorable James G. Maguire
In the House of Representatives, Friday and Saturday, October 13 and 14, 1893.

The House having under consideration the bill (H. R. 3687) to amend an act entitled "An Act to prohibit the coming of Chinese persons into the United States," approved May 5, 1892,

Mr. MAGUIRE said:

The gentleman from Massachusetts [Mr. Morse] scouted the idea that ninety thousand or one hundred thousand Chinamen in this great country could be a source of any real hardship to the country, or any menace to our institutions, social, political, or industrial, and as one basis for his statement in that behalf he called attention to the magnificent, boundless, inexhaustible, natural resources of this country. Our natural resources are indeed measureless and inexhaustible, and if they were open to the people of this country on fair and equal terms — on the terms on which the great Creator gave them to mankind — the gentleman's argument on that phase of the question would be sound.

But these natural resources, without access to which labor can produce no wealth at all, are not open to the people. They are monopolized. Chinese labor would not and could not oppress American labor if our lands were free, but, as it is, land monopoly and cheap imported labor are the upper and the nether millstones, between which American labor is being ground into serfdom and pauperism, as I will presently explain. The natural resources of the Pacific coast, the natural resources of our entire country, are the private property of a few individuals.

This great country, which we are pleased to call ours, belongs, by legal title, to a few landlords whose number and proportion to the whole people are annually growing less.

Every cheapening of labor, by any means, increases the market value of the land and the rent rolls of its owners; thus, by a double process, widening the gulf between the landless poor and our growing landed aristocracy. American labor, driven from the natural sources of independent self-employment, is forced to enter the labor markets of cities and towns and compete for employment with the cheapest labor that is there offered for sale.

Mr. MORSE. Who is responsible for that condition?

Mr. MAGUIRE. The people are responsible, because they have the power to correct the evil and do not exercise that power; but it is to be hoped that the people will ere long relieve themselves of that responsibility.

The monopoly of the natural earth and its God-given resources is the colossal crime of modern civilization, beside which all other oppressions of the poor are insignificant. Land is the exclusive source of human subsistence. All wealth, all means of physical subsistence, are extracted by labor from the natural earth. Indeed, man is a land animal in every sense. His food, his clothing, his shelter, his very body, all come from the land and all to the land return again. He must live upon the land and from the land, if he lives at all. Even the sailor and the aeronaut are not exempt from these conditions of human existence, for the decks trodden by the one and the bars and ropes which support the other are of land.

The right to life, which we all regard as sacred and inalienable, cannot be more sacred than the right of access to the exclusive means by which life can be supported. "You take my life when you do take the means whereby I live."

Yet, in this land of unexampled and unparalleled political liberty, a few men own and control the only source from which the masses of the people can draw their subsistence.

Those few have, therefore, the unnatural power to dictate the terms upon which the masses of the people of this country can live — to fix the terms upon which they may have access to the natural resources that the Creator made necessary to the support of their lives. The Creator not only made and freely gave those resources as a common heritage to all his children for their support and sustenance, but he is constantly from day to day replenishing and improving them by the operation of his natural laws.

The creative power, by its changing seasons, by its sunlight and its rains, and its drifting winds, by. its processes of decay in the vegetable and the animal world, is ever building up and replenishing the elements of the land that yield subsistence for mankind.

The unquestioned legal right of our landed class to entirely exclude their fellow-citizens from the lands of our country involves the power to inflict all oppressions less than such exclusion.

We have, therefore, under the forms of the greatest political freedom, a land system which creates an absolute despotism, under which the land-owning classes are lords of the industries, the liberties, and even the lives of their landless fellow-citizens.

It is in connection with this institution and this condition that we must consider the question of Chinese immigration. To consider the question abstractly is not to consider it at all. Upon the abstract question of human rights we are practically agreed.

HOW LABOR IS DEGRADED.

The condition of land monopoly prevailing in this country tends to fix the wages of all labor according to the standard of living of the lowest class of laborers seeking employment in the country.

American labor is no longer free, because its natural opportunities for self-employment, although they are measureless and inexhaustible, as the gentleman from Massachusetts [Mr. Morse] has said, are closed against it by monopoly. It can no longer escape from an unsatisfactory labor market, but, in spite of the fact that wages bear no relation whatever to the value of labor, it must bid for employment against the cheapest labor that is offered there.

The tendency and the end of such competition in an over-crowded labor market where there is still an army of unemployed laborers, after all demands for labor have been supplied, is to reduce all wages to the line at which the unemployed surplus, facing the alternative of beggary and starvation, are willing to work.

I have seen the whole problem of labor's degradation worked out in practical life before my own eyes. Thirty years ago, sir, labor in California was comparatively free, because land was comparatively free there. Labor was then paid according to its production and not according to the lowest standard of living prevailing among the laborers as now. It was then worth what it produced and it was paid accordingly.

Laborers being then free to go upon the virgin soil and build their homes and establish their own industries, and being able there to comfortably feed and clothe their families and to educate their children in the standard branches of useful learning, were not obliged to remain in the labor market when it offered less favorable conditions. Then California was labor's "Promised Land." Then California was the last rampart from which the boasted and really glorious "standard of American labor" has been permitted to float.

Then there were in our land no tramps, few paupers, and no surplus labor in enforced idleness.

Then sparseness of population and the consequent lack of social advantages imposed the only hardships that were known. What wonder that those who knew the freedom and the happiness of those conditions yearn for their return!

I saw the change of social conditions come. I saw the shadow of land monopoly steal over and encompass our Golden State. I saw a few hundred men become the absolute owners and masters of her great natural resources, that were manifestly intended by their Creator to furnish homes and subsistence to 40,000,000 people. I saw an empire of her best and richest land pass by act of Congress under the dominion of a single, soulless corporation. I saw the gates of natural independence in home and industry closed against American labor.

I saw labor driven from its lucrative and independent retreats in the mountains and valleys into the markets of the cities and towns, there to be sold as a commodity at prices fixed by the laws of trade.

I saw the wages of American labor changed from the value of. ita product down to the price fixed by the alternative of pauperism, while the wealth-producing power of labor was increased, on the average, in all departments of industry, elevenfold.

I saw the beneficiaries of monopoly manipulating the labor market to keep the price of labor down. I saw them importing, in tens of thousands, the coolies of China, not for the benefit of the Chinamen, as Eastern philanthropists persist in believing, but for the double purpose of bearing the labor market, by maintaining a surplus and of teaching American laborers to live on the rations of Asiatic slavery. These beneficiaries, let me say to the gentleman from Kentucky [Mr. McCreary], are the Californians whose brass bands and streaming banners heralded the dawn of Asiatic slavery on the Pacific coast in the ratification of the Burlingame treaty; and they, sir, would again furnish bands and banners to celebrate the resumption of their slave traffic if the Geary act were repealed.

In the great State of California, whose natural resources are confessedly capable of supporting 40,000,000 people, I saw the horrors that are supposed to result only from overpopulation, prevailing with a population of only 1,000,000.

I saw the millionaire and the tramp, contemporaneous menaces tp our civilization, arise out of these conditions.

I saw the millionaire, without productive effort on his part, become a multi-millionaire, upon the tribute commanded by his purchased and granted privileges; and I saw the army of pauperism growing as he grew, and growing because of the conditions that made him grow — recruited by thousands from the ranks of unemployed labor — a ghastly procession of vice and crime, and rags and filth, and torment and despair, drifting listlessly, as "flotsam and jetsam" on the tide of our civilization, to whatever goal a just God may deem suitable at the close of their earthly hell.

These are the results as I have seen them on the Pacific coast, of land monopoly, supplemented by the importation of Chinese slaves. These are the conditions which we seek to mitigate by the enforcement of the Geary act.

The picture that I have drawn is no "distorted vision," no "distempered dream," but a stern tragedy in real life enacted in the open light of day. An awful tragedy on which the curtain rose within my memory, and upon the last act of which — the final triumph of humanity over monopoly — I hope to see the curtain fall within my lifetime.

DECLINE AND FALL OF ROME.

These results of land monopoly are not (excepting the Chinese slavery phase) peculiar to California or the West.

They prevail throughout the civilized world, wherever our land system prevails; but in the older sections of our country the change from free conditions antedates the earliest recollections of the generation now upon the stage of public life, and the Chinese phase of our Western problem has no parallel east of the Rocky Mountains.

But it has a striking parallel in the history of the decline and fall of the civilization and power of ancient Rome.

Macaulay tells us that "in the brave days of old," when Rome was mistress of the world; when to be a citizen of Rome was esteemed the proudest privilege of manhood, her "lands were fairly portioned" among her citizens. In the period of her decline and fall the lands had become the property of a few great landlords who employed slaves to work them. The landless citizens, thus excluded from the poor privilege of working as laborers upon the lands which once their fathers owned, drifted helplessly to the cities and towns, and there, in the helplessness of enforced idleness, they sank into pauperism and vice. Their debased suffrage became mere merchandise in the market, thus extending instead of controlling the powers of the monopolists. The soldiers of Rome became supplicants for alms, and their children hereditary paupers. The outer form of her official life alone preserved the semblance of Rome's departed glory. Then Rome fell, and, over the sepulchre of her once splendid civilization, her epitaph was written: "Latifundia perdidere Italiam" ("Great estates ruined Italy").

Shall history be permitted to repeat itself? Shall the lords of our land be permitted to work it with slave labor? Shall they be permitted to exclude our brethren, and our fellow-citizens from the poor privilege of earning their living as hired laborers upon the land in which, by natural right, they have an equal interest with the landlords themselves?

Shall they be permitted for their private gain to bring upon our country the curse that shattered the Empire of Rome? Shall they be permitted to turn our civilization backward, and make the ages of its development droop again?

No; this is our country, this is our civilization. Their preservation is our first, and our highest duty, and is the truest friend ship to mankind.

We of the West do not yield to the people of New England in love of humanity. As a native son of New England I glory in her devotion to the cause of liberty and civilization. Our warfare is not against the unfortunate Chinamen. We would rather help them than hurt them.

We are struggling to preserve our own people from the hell of slavery that yawns beneath them. That accomplished, we will, in proportion to our numbers and our means, match every dollar and every effort that New England will contribute for the enlightenment and civilization of the Chinese, and for the betterment of their moral and social condition. Until American labor shall be made free we demand that it be protected from the competition of slavery. The emancipation of our own labor is the only just alternative for the exclusion and deportation of the Chinese. This brings me to the discussion of that alternative — the emancipation of labor.

HOW TO MAKE LABOR FREE.

The gentleman from Massachusetts [Mr. Morse] asked: "Who is responsible" for the condition of land monopoly prevailing in this country, and I answered that the people were responsible, because they have the power to correct the evil and do not exercise that power.

The question is pertinent and important, because if the greatest evil of Chinese immigration results from faults in our land system, it may well be asked why we do not cure those faults and let the Chinese remain.

The gentleman's question, touching as it does the very heart of the great social conflict now agitating the civilized world, deserves a more complete and a more detailed answer.

The remedy which I propose for the evil of land monopoly is simple, just, practical and unquestionably sufficient. It is this: To appropriate to public use, by taxation, for the support of our Federal, State, and municipal governments, the entire rental value of all land, irrespective of improvements, and to abolish all other taxes.

Would that be just? If it would not be just it would not be expedient. I hold that no permanent good ever resulted from an act of injustice. "Never yet did men or nations prosper finally in wrong." Entertaining these views and believing with Daniel Webster that "Justice, sir, is the great interest of man on earth," I am fully convinced, after mature deliberation, that the remedy is not only just in itself, but that it embodies the only means by which justice can be permanently and universally established among men.

Land is the common heritage of all mankind. It was freely given by the Creator, with all of its elements and all of its powers, for the equal use and sustenance of all mankind. It was not given to any one generation, nor to any class or classes in any generation, but equally to all mankind, from the first child of nature to the last human creature who shall inhabit the earth.

Land is the common heritage of every child of God — not as the heir of his natural father, not according to the possessions or the will of his natural father, whose right to land perishes with his own life — but as the direct heir of the Universal Father, from whom the right to life, to liberty, to air, to sunlight, are likewise directly inherited.

The true province of government is to regulate the use of this heritage by its citizens while preserving to each his equal right therein.

Why do men monopolize land?

To cure the evil of land monopoly the motive for it must be clearly understood in order that the incentive may be intelligently removed. Is the motive self-aggrandizement, or is it malicious, or is it mercenary? Our common experience is alone necessary to determine the question.

The motive is almost wholly mercenary. The desire for power over other men has its influence, hut it is purely incidental.

Profit, either present or prospective, is practically the sole inducement to land monopoly. That profit is yielded either in present groundrent or future enhancement of the land value.

What is groundrent, and why does land, the natural elements and qualities of which remain unchanged, continue to advance in value in all growing communities?

Who produces the rental value of land? What influence has Chinese slave labor upon groundrent?

Groundrent is the landlord's share of production. It is the tribute charged by the owner of the natural earth for allowing others to use it. Its measure is, referring to any given piece of land: "the excess of its product over that which the same application can secure from the least productive land in use."

In practice it may be generally stated that the rental value of any given piece of land is the difference between the average value of its product and the average cost (labor and capital) of production, for the period of the lease.

It is therefore manifest that whatever increases the value of the product, without increasing the cost of production, increases groundrent, as an increased demand for the product, resulting from increase of population or other cause, or an improvement in the quality of the product.

It is also manifest that whatever reduces the cost of production tends to increase groundrent, as: a reduction of the wages of labor, inventions of labor-saving machinery, and improvements in the methods of combining and subdividing labor.

Thus it is that, under our land system, every contribution to material progress, as well as every reduction in the wages of labor, attaches itself to the land and inures to the benefit of the landlords in increased groundrent.

For example, let as suppose that a given farm, or a shop or store site, which can be operated by one man, will yield a groundrent of $150 per year, when the standard wages of the required labor are $2 per day; if the wages of such labor be generally reduced to $1.75 per day, the cost of productively using that land will be reduced about $75 per year, and the amount of that reduction of cost can be added to the rent, unless, as another result of the reduction of wages the price of the product also goes down in the market.

Making an allowance of $40 on account of the reduction in the price of the product (a very liberal allowance), we have a net saving of $35 per year, which the landlord can add to his rent. This is the primary effect, only, of the reduction of wages upon the value of land. There is another effect equally important. A piece of land which will yield a certain amount of rent annually as a net income, is worth as an investment twenty times the amount of its annual rent.

Therefore, an addition of $35 per annum to the rental value of the land in question would increase its market price $700.

Thus, the reduction of 25 cents per day in the poor man's wages not only lessens his purchasing power to that extent, but actually adds $700 to the price of the home which it is his life's ambition to secure.

This is the result which every reduction of wages brought about by Chinese competition has produced in California.

This is the result which, with greater or less intensity, is being produced by land monopoly everywhere.

The displacement of labor by labor-saving inventions drives the displaced laborers into the market to swell the army of the unemployed. The natural opportunities for the redistribution of the labor thus displaced being closed by monopoly, competition among laborers is intensified, wages reduced, and rent correspondingly increased.

This is the process which is enslaving labor and exalting landlordism everywhere.

PUBLIC ENTITLED TO ALL GROUNDRENT.

We have now seen, in brief outline at least, what groundrent is and how it arises. We have seen that it is an increment of value produced and imposed upon the natural earth by the presence, industry, enterprise, inventiveness, and virtues of the whole people of each community in which it arises.

We have seen that it absorbs all of the general advantages of the material progress of the whole people, that to the landlord it is in every sense an unearned increment to which as landlord he does not in any way contribute.

Merely permitting labor to use land productively is not a contribution to production, because the land, with all of its useful elements, was given to mankind by God, and would have been accessible to labor if the shadow of landlordism had,never darkened the horizon of our civilization.

The landlord is not entitled to the rental value of his location, because he does not produce it.

The community is entitled to the rental value, because the community does produce it. Every value belongs of natural right to him whose labor or service produces it, and without whose labor or service it would not have existed. It is immaterial whether the value be produced by one person, or by ten persons, or by a million persons. It belongs to those who produce it — individually, if it be individually produced; collectively, if it be collectively produced.

The argument in favor of leaving the accrued rental value of land, that is, the unearned increment which has already attached to land, to the present owners, is based upon a mistake of fact. There is no such thing as an accrued rental value attaching to any land. All future rental values of land depend upon what the people will do in the future, and not at all upon what they have done in the past.

It is, therefore, just for the people who produce the rental value of land to take that value by taxation for their public uses.

This rule applies to all land whether it be owned by landlords, or by speculators, or by its immediate occupants.

The value which the public gives to the location should be paid to the public by the person who is in a position to control or appropriate that value.

As the landlords have confessedly no moral or legal right to compel the people to put forth the enterprise and industry necessary to produce and to maintain the rental value of their lands, they certainly can have no moral right to privately appropriate any of the direct or indirect results of such enterprise and industry as the people may voluntarily put forth.

As to improvements, the man who plants an orchard, or digs a ditch, or builds a house or a fence should pay no more taxes upon his orchard or his field or his lot than he would be required to pay if he had made no improvements whatever.

The value of the improvements belongs to the man who makes the improvements, by the same rule of right which awards the value of the location to the people who produce it; and a wise concern for the public interest dictates the encouragement of improvements by exempting them from taxation, rather than the discouragement of improvements by placing any kind of burden upon them.

The man who builds a house or plants an orchard increases the means of satisfying human wants, and is a benefactor of mankind in spite of the fact that his motive may be purely selfish; while the man who keeps a foot of useful land out of use works a corresponding injury to mankind.

This expediency of raising all public revenues by a single tax on land values, as a substitute for all other forms of taxation, further appears in the fact that it would save nine-tenths of the expense and waste now involved in levying and collecting taxes upon personal property, upon imports, and upon business privileges, all of which taxes are regularly shifted from the primary payers to the ultimate consumers — falling principally upon the overburdened farmers and laborers of our country.

Besides it would require men to pay taxes according to the advantages which they receive from the community, and not according to their necessities, as now.

As such a tax would bear upon land according to its value, and not according to area, and as the value of farming land is very small, by comparison with the value of land used for commercial and other industrial purposes, the small farmers — the most heavily burdened class under our present system — would find the single tax less in volume and far less oppressive in method than the complex and accumulated burdens of the direct and indirect taxes which now fall upon them with notorious inequality.

A tax on land values is the only property tax that always falls with proportionate equality upon all owners and that cannot be shifted from the person paying it to the ultimate consumer or user. The reason that it cannot be shifted is that while a tax on any other kind of property tends to check its production, and thus, by the law of supply and demand, to increase its price sufficiently to cover the tax, a tax on land values forces idle land into the market, increasing the supply of land offered for sale or lease, and thus, by the same law of supply and demand, reducing, instead of increasing, the rent. Heavy taxation of houses increases the rent of houses by the amount of the tax, but heavy taxation of land values decreases the rent of land. All political economists are agreed on that proposition, and it needs no argument.

Such a change in our taxation laws would not be an impairment of any vested right of landowners, because the power and right of taxation, to the extent of taking the entire rental value, whenever the public good may seem to require it, has been absolutely reserved to our governments, national and State, against every foot of land that has ever passed into private ownership in this country.

EFFECTS OF THE SINGLE TAX.

The effect of such a system of taxation upon the monopoly of land in this country must be instantly apparent. It would at once make such monopoly unprofitable and wasteful to the monopolist. It would at once take away the only incentive that now exists for the monopoly of land. It would compel all landowners to use their land productively, or at once let it go to those who would so use it.

Every user of land could afford to pay the margin of production or economic rental value of his land in taxes; but no man, above the mental level of a fool, would pay taxes amounting to the economic rental value of his land for the mere purpose of monopolizing it.

It would put an end to land speculation and the train of evils that follow ever in its wake. It would put an end to the collection of speculative rent, to booms, and to industrial depressions.

It would encourage the productive use and improvement of lands by relieving them of all public burdens, while insuring permanency of tenure, security of improvements, and security in the fruits of all productive effort.

It would forever settle the conflict between capital and labor and, by improving the condition of labor, put an end to strikes and boycotts and lockouts.

It would make land freer to labor than it was in California forty years ago; freer than it was on the Atlantic seaboard two hundred years ago.

It would restore the once cherished dignity of American labor, and the grand individuality which was once the distinguishing characteristic of American citizenship.

As a relief to our overcrowded labor markets, it would be equal to the discovery of a new and free and fertile continent in the Pacific Ocean, and its advantages would be more permanent.

PHILOSOPHY OF HENRY GEORGE.

The people have not yet sufficiently learned that labor never can be free except where land is free.

Knowledge must ever precede right credence, and right credence must ever precede correct political action.

The people are reading and studying the philosophy of Henry George. Progress and Poverty, which a distinguished English writer has happily denominated "a glorious gospel of justice," is steadily and rapidly changing the credence of the world on the subject of land tenure.

It is the herald of the next great step in the order of social evolution.

It is a practical development of the principles of Jeffersonian Democracy. It is a justification of our Declaration of Independence. It is a vindication of "the ways of God to man."

James Maguire's speech in the House of Representatives: 1894-01-31 Direct Taxation of Land Values

Search this on "Santa Marguerita" and on Salinas River.

 

DIRECT TAXATION OF LAND VALUES,

Speech of HON. JAMES G. MAGUIRE, of California.
In the House of Representatives, Wednesday, January 31, 1894.

The House being in Committee of the Whole on the state of the Union, and having under consideration the bill (H. R. 4864) to reduce taxation, to provide revenue for the Government, and for other purposes, and the question being upon an amendment thereto offered by the gentleman from Tennessee (Mr. McMillan), providing for a tax on incomes, etc., the following proceedings were had:

MR. MAGUIRE. Mr. Chairman, I offer the amendment which I send to the desk. The amendment was read, as follows:

Amend the amendment by striking out sections 1 to 18 thereof, both inclusive, and inserting in lieu thereof the following:

"And be it further enacted, That a direct tax of $31,311,125 be, and is hereby, annually laid upon land values in the United States, and the same shall be, and is hereby, apportioned to the States and Territories and District of Columbia, respectively, in proportion to population as ascertained by the census enumeration of the year 1890.

"Sec. 2. That the said direct tax laid by this act shall be assessed and laid on the value of all land exclusive and irrespective of the improvements thereon; Provided, That all lands belonging to the United States, or to any State, county, or municipality, shall be exempted from assessment and taxation under this act; And provided further, That all land subject to taxation under this act shall be valued and assessed, for the purpose of taxation, at its full market value, on the first Monday in March of each year, the valuation for the fiscal year commencing on the 1st day of June, 1894, to relate to the first Monday of March, 1894.

"That, for the purpose of assessing said tax and collecting the same, sections 9 to 12, both inclusive; sections 14 to 48, both inclusive, and sections 53 to 58, both inclusive, of that certain act entitled 'An act to provide increased revenue from imports to pay interest on the public debt, and for other purposes,' approved August 5, 1861, are hereby re-enacted and made of full force and effect hi so far as they provide for the assessment and collection of direct taxes on lands and lots of ground, and for any and all methods and procedure in the levying, collection, and enforcement of such taxes."

Mr. MAGUIRE (continuing) said:

Mr. Chairman: The arguments in support of the pending amendment have all proceeded upon the theory that the proposed tax upon incomes, above $4,000 per annum, will compel the rich to bear a fairer proportion of the expenses of the Government than they now bear, and that the people will be satisfied with the accomplishment of that result. The people do, indeed, very much desire the establishment of such a system of taxation, and their claim for a more equitable distribution of the burdens of taxation is unquestionably just. But they are really desirous of substantial relief from the present power of the rich to use their wealth for the oppression of the poor; and they expert some measure of that relief to come to them through the income tax.

Such relief will not come from the income tax, nor will that change in our system of taxation even tend to curb the oppressive power of wealth. It simply puts a 2 percent tax mainly on the results of useful investments and of personal effort. The control of labor by wealth, in certain forms of investment, and the consequent unfairness in the distribution of the products of labor is a matter of infinitely greater importance to the people than the equalization of the burdens of government, which is sought to be accomplished by the income tax. I am in favor of the income tax, as proposed by the Committee on Ways and Means, because it is better than the system of taxation now prevailing; because the burdens which are laid by the income tax, wherever they may ultimately fall, are all for public uses, while under the tariff system three parts of the burden are laid for the enrichment of private individuals to every one part that is collected for public use.

As a choice between the income tax and any extension of tariff taxation, beyond that provided for in the "Wilson" bill, I will unhesitatingly vote for the income tax.

UNDUE POWER OF WEALTH.

But, sir, I seek by the amendment which I have just submitted to establish a system of taxation by which the revenues necessary for the support of this Government can be raised without any burden whatever upon either industry or commerce, and by which, at the same time, the power of accumulated wealth over labor will be destroyed. The power of wealth to oppress labor results almost entirely from the present investment of wealth in the control of the natural resources, from which alone labor can produce wealth.

Land is the storehouse in which the Creator has placed the raw materials of all wealth, and labor is the means by which those raw materials are changed into forms of usefulness for the satisfaction of human wants. Wealth is the result of labor applied to land, or to the products of land, and land furnishes not only this raw material for all wealth, but it constitutes also the home and the working place of all labor. All of these things the Creator freely provided for the use and sustenance and shelter and comfort of mankind by giving the land of the world, with its abundant resources, as an equal heritage to the whole human race. The same Creator made man a land animal. He must live upon the land, and from the fruits of the land, if he shall live at all. All of his food and clothing and shelter, and every other thing that will tend to satisfy his wants, natural and acquired, come from the land. Indeed, his whole physical body comes from the land, and goes back to the land again at the close of his life.

Separated from the land, man must perish, just as a fish would perish on being separated from the water, which is his element. Therefore, if man has a natural and inalienable right to life and to liberty and to the pursuit of happiness, he must have a natural and equally inalienable right to the means which the Creator, who gave him life, has freely and abundantly provided for his support. There can be no right to life more sacred than the right to the means of sustaining life. "You take my life when you do take the means by which I live." Liberty is impossible to one man so long as another man controls his means of living.

John Dewey's Foreword to Geiger's "The Philosophy of Henry George" (1933)

Many are familiar with John Dewey's 1928 "An Appreciation of Henry George," which prefaced the book "Significant Paragraphs from Progress and Poverty," but this 1933 essay is worth knowing, too, and it is harder to find online. [See also Dewey's 1933 radio address, "Steps to Economic Recovery".]

I like his summation, in the first paragraph: "Practical Idealism."

 

John Dewey's Foreword to The Philosophy of Henry George
by George Raymond Geiger

THE life history of Henry George is typically American even though it has few parallels in this country. There are many instances of rise from poverty and obscurity to wealth or fame or both in the realms of business and politics, and there have been many self-made thinkers in various fields. But Henry George stands almost alone in our history as an example of a man who, without a scholastic background, succeeded by sheer force of observation and thinking that were dictated by human sympathy, and who left an indelible impress on not only his own generation and country but on the world and the future. He is an outstanding example of something of which we hear a good deal, but mainly in the way of unjustified boasting, since the quality in question is more marked in talk than evident in conduct: Practical Idealism. He is an example of what may be accomplished by unswerving devotion and self-sacrifice to a dominating idea. He was, we might say, a man of a single idea, but the statement would be misleading unless we also said that he broadened this one idea until it included a vast range of social phenomena and became a comprehensive social philosophy.

Henry George is typically American not only in his career but in the practical bent of his mind, in his desire to do something about the phenomena he studied and not to be content with a theoretic study. Of course he was not unique in this respect. The same desire has been shared by many British economists. John Stuart Mill's theoretical writings were ultimately inspired by interest in social reform. But there is something distinctive in the ardent crusade which George carried on. His ideas were always of the nature of a challenge to action and a call to action. The "science" of political economy was to him a body of principles to provide the basis of policies to be executed, measures to be carried out, not just ideas to be intellectually entertained, plus a faint hope that they might sometime affect action. His ideas were intrinsically "plans of action."

Unfortunately, in some respects, the American public was practical-minded in a much narrower sense and shorter range than was Henry George himself. It is perfectly true that the culmination and indeed the meaning of his social philosophy is to be found in his proposals regarding taxation. It is also true that many persons accept and are justified in accepting his taxation scheme without having knowledge of or interest in the background of principles and aims with which this scheme was organically associated in the mind of Henry George himself. But nevertheless the connection between the theoretical part and the practical part was vital in the thought of George himself. Something vital in acquaintance with his thought is lost when the connection is broken. One may understand the plan of tax reform by itself but one comes far short in that case of understanding the idea which inspired Henry George.

In spite, therefore, of the immense circulation of George's writings, especially of Progress and Poverty (which I suppose has had a wider distribution than almost all other books on political economy put together), the full sweep of George's ideas is not at all adequately grasped by the American public, not even by that part which has experienced what we call a higher education. Henry George is one of a small number of definitely original social philosophers that the world has produced. Hence this lack of knowledge of the wider and deeper aspects of his thinking marks a great intellectual loss. In saying this, I am not speaking of acceptance of his ideas but of acquaintance with them, the kind of acquaintance that is expected as a matter of course of cultivated persons with other great social thinkers, irrespective of adoption or nonadoption of their policies.

I should hesitate to write in this way, lest I might be thought to depreciate the practical importance of his plan of social action were it not for two things. One of these things is the fact which I have already stated. His theoretical conceptions and his program of social action are so closely united that knowledge of the first will inevitably lead on to a better understanding of the second. The other reason is more immediately applicable. Actual social conditions (like those for example of the present) are bound to raise the problem of reform and revision of methods of taxation land public finance. The practical side of George's program is bound in any case to come forward for increased attention. It is impossible to conceive any scheme of permanent tax reform which does not include at least some part of George's appropriation by society for social purposes of rental value of land. For instance, we are just beginning to understand how large a part unregulated speculation has played in bringing about the present crisis. And I cannot imagine any informed student of social economy denying that land speculation is basic in the general wild orgy, or that this speculation would have been averted by social appropriation, through taxation, of rent. To a large extent, then, some knowledge of the directly practical side of George's thought is bound, in the long run, to result from the movement of social forces. A corresponding knowledge of George's theory of the importance of land -- in the broad sense in which he uses the word -- in social development, of the causes of moral progress and deterioration, cannot be secured, however, without an understanding of his underlying philosophy.

The importance of a knowledge of this underlying philosophy is urged in spite of the fact that the present writer does not believe in the conceptions of nature and natural rights which at first sight seem to be fundamental in the social philosophy of Henry George. For, as I see the matter, these conceptions are symbols, expressed in the temporary vocabulary of a certain stage of human history of a truth which can be stated in other language without any serious injury to the general philosophy implied. It has repeatedly been pointed out that the real issue in the "natural rights" conception is the relation of moral aims and criteria to legal and political phenomena. Personally, I have little difficulty in translating a considerable part of what George says on nature over into an assertion that economic phenomena, as well as legal and political, cannot be understood nor regulated apart from consideration of consequences upon human values, upon human good: that is, apart from moral considerations. The question whether a "science" of industry and finance, of wealth, or of law and the State, can exist in abstraction from ethical aims and principles is a much more fundamental one than is the adequacy of certain historical concepts of "nature" which George adopted as a means of expressing the supremacy of ethical concepts, and on this fundamental question I think George was in the right.

This statement brings me to the connection which exists between the foregoing remarks and the work of Dr. Geiger to which the remarks are introductory. In connection with every topic he discusses, Dr. Geiger makes it clear that a vital connection between ends, human values, and economic means is at the basis of George's distinctive treatment. This fact alone gives a distinctive and timely color to this book. Moreover, the significance of Dr. Geiger's treatment does not stop at this point. There is no phase of the work and the influence of Henry George which is not considered. The account of his life and development forms a personal thread which binds all the parts together. Dr. Geiger has given us a book which meets the contemporary demand for an adequate interpretation of the thought and activity of Henry George regarded as a vital whole and not as an aggregate of isolated parts. It will enable the reader to obtain a clear and comprehensive view of one of the world's great social philosophers, certainly the greatest which this country has produced.

JOHN DEWEY

 

The book is online at  http://catalog.hathitrust.org/Record/006827034

The Ultimate Corporate Subsidy: The Unearned Increment

I was listening to Bob Edwards interview Ralph Nader, on the occasion of the latter's publication of a new book, and Nader was talking about things the left and the right might be able to agree on.  I was in traffic, and only half listening, but when Nader spoke of corporate subsidies, it hit me that one of the biggest corporate subsidies, and one which the average person isn't at all conscious of, is the unearned increment, the possession of unearned wealth.

It isn't that some individuals don't get to collect some, too -- particularly those who own land (with or without a building on it) in or near the major coastal cities, but the lion's share goes to corporations, and their shareholders, who tend to be the 1%.

For more about the unearned increment, start here.

"Our plan involves the imposition of no new tax, since we already tax land values in taxing real estate. To carry it out we have only to abolish all taxes save the tax on real estate, and abolish all of that which now falls on buildings or improvements, leaving only that part of it which now falls on the value of the bare land, increasing that so as to take as nearly as may be the whole of economic rent, or what is sometimes styled the "unearned increment of land values." 

Can we get the leaders of the left and right to look at this, or are they owned by the corporations?

Is a land value tax the solution to our housing affordability problem?

http://www.propertyobserver.com.au/housing-affordability/is-a-land-value-tax-the-solution-to-our-housing-affordability-problem

Is a land value tax the solution to our housing affordability problem?

By Catherine Cashmore |  Monday, 25 November 2013

There’s been a lot of debate around property taxation in Australia - significantly negative gearing, which allows an investor to use the short fall between interest repayments and other relevant expenditure, to lower their income tax.  

The policy promotes speculative gain meaning the strategy is only profitable if the acquisition rise in value rather than holding or falling - therefore, in Australia, investor preference is slanted toward the established sector  – the sector that attracts robust demand from all demographics and as such, in premium locations, has historically gained the greatest windfall from capital gains.  

Aside from the impact this creates in terms of affordability (pushing up the price of second-hand stock, burdening new buyers with the need to raise a higher and higher deposit just to enter ownership), it also negatively affects the the new home market, which traditionally struggles to attract consistent activity outside of targeted first home buyer incentive; albeit, the headwinds resulting from planning constraints and supply side policy should also not be dismissed.  

Additionally, capital gains tax and stamp duty have also received much debate. Both are transaction taxes, and therefore have a tendency to stagnate activity, acting as a deterrent to either buying and selling.  

Stamp duty, as modelled by economist Andrew Leigh, is shown to produce a meaningful impact on housing turnover, leading to a potential mismatch between property size and household type – a deterrent to downsizing and therefore selling.  

Additionally, it burdens first time buyers by increasing the amount they need to save in order to enter the market and frequent changes of employment concurrent with a modern day lifestyle, are hampered as owners, unwilling to move any meaningful distance outside their local neighbourhood, search for work in local areas alone.  

But, outside of academia and intermittent articles, there is scant debate in Australian mainstream media regarding land value tax and it’s practical impact.  

The theory is taken to its extreme and best advocated by American political economist and author, Henry George, who wrote his publication Progress and Poverty - an enlightened and impassioned read - and subsequently inspired the economic philosophy that came to be known as ‘Georgism.’  

The ideals of Henry George reside in the concept that land is in fixed supply, therefore we can’t all benefit from economic advantage gained from ‘ownership’ of the ‘best’ sites available without effective taxation of the resource.  

George advocated a single tax on the unimproved value of land to replace all other taxes – something that would be unlikely to hold water in current political circles. However, his ideals won favour amongst many, including the great economist and author of Capitalism and Freedom, Milton Friedman, and other influential capitalists such as Winston Churchill, who gave a powerful speech on land monopoly stressing:  

“Unearned increments in land are not the only form of unearned or undeserved profit, but they are the principal form of unearned increment, and they are derived from processes which are not merely not beneficial, but positively detrimental to the general public.”  

In essence, raising the percentage of tax that falls on the unimproved value of land has few distortionary or adverse affects.  It creates a steady source of revenue whilst the landowner can make their own assessment regarding the timing and type of property they wish to construct in order to make profit without being penalised for doing so.  

However, when the larger percentage of tax payable is assessed against the value of buildings and their improvements – through renovation, extension or higher density development for example – not only can those costs be transferred to a tenant, there is less motivation to make effective use of the site. This has a flow on effect which can not only exacerbate urban ‘sprawl’, but also increase the propensity to ‘land bank.’  

The Henry tax review commissioned by the government under Kevin Rudd in 2008 concluded that “economic growth would be higher if governments raised more revenue from land and less revenue from other tax bases,” proposing that stamp duty (which is an inconsistent and unequitable source of revenue) be replaced by a broad based land tax, levied on a per square metre and per land holding basis, rather than retaining present land tax arrangements.  

The Australian Housing and Urban Research Group attempted to mimic the proposed changes using their AHURI-3M micro-simulation model in a report entitled The spatial and distributional impacts of the Henry Review recommendations on stamp duty and land tax .  

And whilst it’s difficult to qualify how purchasers may factor an abolition of stamp duty into their price analysis, perhaps adding the additional saving into their borrowing capacity, and therefore not lowering prices enough to initially assist first homebuyers.  It does demonstrate how over the longer-term falls in house prices have the potential to exceed the value of land tax payments, assisting both owner-occupier and rental tenant as the effects flow through.  

Additionally, increasing the tax base would provide developers with an incentive to speed up the process and utilise their holding for more effective purposes.

And importantly for Australia, it can provide a reliable provision of revenue to channel into the development of much-needed infrastructure.  

The rational for this is coined in the old real estate term ‘location, location, location.’  Everyone understands that in areas where amenities are plentiful – containing good schools, roads, public transport, bustling shopping strips, parks, theatres, bars, street cafes and so forth – increases demand and therefore land values, invoking a vibrant sense of community which attracts business and benefits the economy.  

The idea behind spruiking a ‘hotspot’, such a common industry obsession, is based on purchasing in an area of limited supply, on the cusp of an infrastructure boom such as the provision of a new road or train line for example, enabling existing landowners to reap a windfall from capital gains and rental demand for little more effort than the advantage of getting in early and holding tight whilst tax payer dollars across the spectrum fund the work.

Should a higher LVT be implemented, the cost and maintenance of community facilities could in part, be captured from the wealth effect advantaging current owners, compensating over time for the initial outlay.  Imagine the advantage this would offer residents in fringe locations who sit and wait for the failed ‘promises’ offered, when they migrated to the outer suburbs initially. 

Take New York for example – between the years 1921 and 1931 under Governor Al Smith, New York financed what is arguably the world’s best mass transit system, colleges, parks, libraries, schools and social services shifting taxes off buildings and onto land values and channelling those dollars effectively.  

The policy influenced by Henry George ended soon after Al Smith’s administration, and eventually lead to todays landscape - a city built on a series of islands, with limited room to ‘build out’ facing a chronic affordable housing shortage with the population projected to reach 9.1 million by 2030.

More than a third of New Yorkers spend half their pay cheque on rent alone yet like London, there is little motivation for developers to build housing to accommodate low-wage workers concentrating instead on the luxury end of market, broadening the gap between rich and poor as land values rise and those priced out, find little option but to re-locate.  

New York’s Central Park is the highest generator of real estate wealth.  The most expensive homes in the world surround the park with apartments selling in excess of $20 million, and newer developments marketed in excess of $100+ million.  

Like London it’s a pure speculators paradise – in the 10 year period to 2007, values increased by 73% - owners sit on a pot of growing gold and there’s little to indicate America’s richest are about to bail out of their New York ‘addiction’ with an expansive list of A-list celebrities, high net worth individuals, and foreign magnates, owning apartments in the locality.  

New mayor-elect, Bill de Blasio, who won his seat, based on a promise to narrow the widening inequality gap - preserve 200,000 low and middle income units, and ensure 50,000 affordable homes are constructed over the next decade, will struggle to subsidize plans whist facing a deficit reputed to be as much as $2 billion in the next fiscal year.  

Yet economist Michael Hudson has recently assessed land values in New York City alone to exceed that of all of the plant and equipment in the entire country, combined.  

Currently more than 30 countries around the world have implemented land value taxation - including Australia - with varying degrees of success not only based on the percentage split between land and property, but how those funds are channelled back into the community and the quality of land assessments in regularly updating and estimating value.  

Pennsylvania is one such state in the USA to use a system which taxes land at a greater rate than improvements on property – I think I’m correct in saying 19 cities in Pennsylvania use land value tax with Altoona being the first municipality in the country to rely on land value tax alone.  

Reportedly, 85% of home owners pay less with the policy than they do with the traditional flat-rate approach. When mayor of Washington county, Anthony Spossey, who also served as treasurer from 2002 to 2006 and under his watch enacted an LVT, was interviewed on the changes in 2007, he commented:  

“LVT ..helps reduce taxes for our most vulnerable citizens. We have an aging demographic, like the county, region and the state. Taxpayers everywhere are less able to keep up with taxes, and that hurts revenue. LVT helps us mitigate the impact both to them and the city. It’s a win/win.”  

Until fairly recent times, another good example to cite is Pittsburgh. Early in the 1900s the state changed its tax system to fall greater on the unimproved value of land than its construction and improvements.  

Pittsburgh’s economic history is a study in itself, and has not been without challenges.  For those wanting to research further, I strongly advocate some of the writings of Dan Sullivan - (former chair of the Libertarian Party of Allegheny County, (Pittsburgh) Pennsylvania) - who is an expert on the economic benefits of LVT and has written extensively on the subject.  

Sullivan demonstrates that Pittsburgh not only enjoyed a construction boom whilst avoiding a real estate boom under a broad based LVT system, but also effectively weathered the great depression whilst maintaining affordable and steady land values along the way.  

In comparing it to other states struggling to recover from the recent sub-prime crisis he points out:  

“In 2008, just after the housing bubble broke, Cleveland led the nation in mortgage foreclosures per capita while Pittsburgh's foreclosure rate remained exceptionally low. Since then, the foreclosure rates in Las Vegas and many Californian cities, none of which collect significant real estate taxes, have passed Cleveland's foreclosure rate. However, on September 15, 2010, The Pittsburgh Post-Gazette reported that while at the end of the second quarter of 2010, 21.5% of America's single-family homes had underwater mortgages (the American term for negative equity), only 5.6% did in Pittsburgh. As a result Pittsburgh was top of a list of the 10 marketswith the lowest underwater mortgage figures.”

When land value tax is implemented - with the burden taken of buildings and their improvements, ensuring good quality assessments and sensible zoning laws – it not only assists affordability keeping land values stable, but also benefits local business through infrastructure funding, discourages urban sprawl, incites smart effective development of sites, reduces land banking, and as examples in the USA have demonstrated – assists in weathering the unwanted impacts of real estate booms and busts.  

Despite the numerous examples across the world where a broad based land value tax has been deployed successfully, changing policy and bringing about reform is never easy and rarely without complication.  

Additionally, the implications of a yearly tax on fixed low-income retirees must be handled with care and understanding, as there are ways to buffer unwanted effects whilst changes are implemented.  

Therefore, the process adopted in the ACT which is abolishing stamp duties over a slow transitional 20 year period to phase in higher taxation of land is not altogether unwise.  

With any change to the tax system, the headwinds come convincing the public that it’s a good idea. In this respect balanced debate and conversation is necessary, as questions and concerns are brought to the fore.  

The increased tax burden also falls on those who have significant influence across the political spectrum; therefore strong leadership to avoid lobbying from wealthy owners with vested interests is essential.  

Albeit, as I said last week, we have a new and growing generation of enlightened voters who are well and truly fed up with battling high real estate prices, inflated rents, and care not whether it’s labelled as a ‘bubble’ – but certainly care about their future and that of their children.  

Therefore – I do see a time when all the chatter around affordability, will finally evolve into real action – and a broad based LVT should form an important part of that debate.

 

---

Catherine Cashmore is a market analyst with extensive experience in all aspects relating to property acquisition.

 

"the collectively earned increment"

I came across an interesting article from 1908, with what strikes me as a well-described concept:

http://archive.org/stream/worldswork17gard/worldswork17gard_djvu.txt

November, 1908

MUTUAL TOWN-BUILDING IN ENGLAND
"GARDEN CITIES" OF INDIVIDUAL, DETACHED HOMES BUILT WITHOUT THE AID OF PHILANTHROPY — A BETTER PLAN THAN REBUILDING THE SLUMS

BY WILHELM MILLER
(who visited these cities to make a first hand study of them)

LETCHWORTH, "the perfect city," less than five years old but with 6,000 inhabitants, is thirty-four miles north of London and is reached by the best trains in fifty minutes. It has 3,818 acres and its population is limited to 35,000 inhabitants, so that there will never be any crowding. The factory quarter can never be enlarged; it is situated as far as possible from the residence quarter and the prevailing wind carries the smoke away from the homes. Nearly one-sixth of the town site, or two hundred acres, is perpetually reserved for open spaces, including parks, jjlaygrounds, and a golf course.

And even if the surrounding country should build up as solidly as London, the people of Letchworth are always sure of enjoying a beautiful rural scene because a large belt is perpetually reserved for agriculture. This belt comprises 2,500 acres, or 65 percent of the whole estate. It will undoubtedly be occupied by market gardeners and dairymen, for gardens yield about eleven times as much profit per acre as farms.

A man can buy a house at Letchworth or he can rent one, but he cannot buy the land. He cannot even lease it for 999 years, because that would enable him to sell or lease his property in such a way as to make a profit from the unearned increment. He can lease the land for ninety-nine years without revaluation and the improvements will not revert to the landowner. In any case, he has every advantage enjoyed by the man who owns the land outright — save one. He cannot get rich from what Henry George called the "unearned increment" but which in Letchworth is called the "collectively earned increment." Even if he rents his house and land from week to week he cannot be dispossessed by some one who offers more money. In the agricultural belt, the tenant is allowed to continue in occupation as long as he is willing to pay as much as anyone else, less 10 percent, in favor of the present tenant.

Letchworth has been built upon a plan whereby people in any part of the world can make a city that is practically perfect without asking any rich man to give money, and without facilities for borrowing any large amount. The essence of the scheme is to preserve to the people the "collectively earned increment." The Letchworth people take some pride in the use of this phrase, and justly. For, merely by moving to Letchworth and living there they created in four and a half years a net increase of half a million dollars. They do not get that half million now, but some day they will get 95 percent of it in the form of abolition of taxes. And that day, in my opinion will come in about twenty years, for by that time the city should be able to pay back all that its public works have cost.

THE TWO OTHER "GARDEN CITIES "

There are two other successful "garden cities," Bourneville, a suburb of Liverpool built by the Cadbury Cocoa Works, and Port Sunlight near Birmingham created by the Lever Brothers, soap manufacturers, solely for their employees.

Port Sunlight is the most beautiful because the Messrs. Lever have gone to the unnecessary extreme of making no two houses alike. Also, they have spent more upon ornamentation of
houses than is necessary and they plant and care for all the front yard gardens.

The tenants at Port Sunlight get more for their money than elsewhere for two reasons. First, the rents are too low, because they are calculated only to pay expenses. Second, the social institutions, though more elaborate than elsewhere, cost the people nothing originally and they can and do manage them so as to keep expenses down to the mininum.

THE "taint" of philanthropy

The one great drawback to the Port Sunlight idea is that it involves too great an expenditure on the part of one man or one firm, and it is hard to prove to a factory owner that the investment is worth while. In this case, the factory owners disclaim all idea of philanthropy and are positive that it pays, because their employees are healthier, happier, more prosperous and therefore more efficient.

The Lever Brothers rejected all direct profit-sharing schemes because they thought this the only plan that would benefit the wives and children of the men. There is the keenest competition for a chance to work in that factory and live in one of those houses. But all the profits to the firm are indirect. Rarely, if ever, can they be expressed in dollars and cents and indirect profits can never be expected to weigh in the mind of the average employer against the appalling fact that Lever Brothers have put about $1,700,000 into their paradise at Port Sunlight and have never directly gotten back one cent.

In other words, if this is not philanthropy, it is too much like it to be generally copied. Humanity cannot look to great employers for the solution of the housing problem. And employees do not want philanthropy.

And at Bourneville there is less of the philanthropic spirit. The employees of the Cadbury Cocoa Works get a normal social life, which the people of Port Sunlight do not have. The cocoa workers are not obliged to live in Bourneville and only 42 percent of the tenants at Bourneville are employed at the Cadbury factory. Thus Bourneville is a mixed community and the ideal community must be mixed — not merely industrial, or suburban, or composed exclusively of any one class. It is sad to see the magnificent clubs, lecture halls, baths, and other social features at Port Sunlight languish for attendance, but it is only human nature. On getting home after a day's work, a man wants to forget thoughts of his work. And if he lives in a city where every house and every person he sees on the street suggests the workroom, he is bound to escape to the next town where he can get a drink or otherwise forget his daily routine. The only serious complaint which the tenants at Port Sunlight have any right to make is that they live in the atmosphere of a single class.

Mr. Cadbury gave Bourneville to the people. How then does it escape the "taint" of philanthropy?"

A GREAT FUND FOR PROPAGANDA

It is true that Mr. Cadbury gave the property to a trust which administers it for the benefit of the people, but eventually this trust will be able to finance hundreds of other garden cities that will be purely cooperative. For instance, people wishing to live in a "garden city," where all the "collectively earned increment" benefits all alike instead of going to the building up of individual fortunes, can form a stock company with shares as low as $25. If the Bourneville trust approves of their plan, it will lend them enough money to start a town. But the company must pay it back, so that the Bourneville trust can use it again and again.

How does the Bourneville trust hope to get this fund? Its income, which is almost wholly rent, doubles every five years. At this rate, in fifty years it will have an annual income of five million dollars. Long before that, Bourneville will have reached its limit of population. And since the trust never has to pay back the cost of the houses, roads, or other public works, it will be able to roll up a vast sum for the propagation of the "garden city" idea.

The all-important point is that the Bourneville trust will never give anyone something for nothing. It will merely lend money to people who are building "garden cities."

THE HEALTH AND BEAUTY OF THESE CITIES

These are far healthier and more beautiful than cities that have grown up normally; healthier because crowding is prevented by a limit to the population and because more and better provision is made for outdoor sports — to say nothing of architecture in which health is the first thought. The average town death-rate in England is 15 per 1,000. Letchworth has cut this down to 2.75. The birthrate at Port Sunlight is twice the average for the rest of England.

The greater beauty of these garden cities lies chiefly in the architecture and gardening. The houses and stores all conform to one general style of architecture, but are never monotonous. Every building must be approved by the city's architect. The houses are all of brick and built to last. There are no long rows of houses just alike. The first idea was to have no two houses alike but that is a needless waste of money. For poor people it is impossible to get good houses cheap enough without building three or four in a row and this row can be duplicated in another part of town without harming the total effect. Moreover, Bourneville has shown how much can be saved on ornamentation. The plainest houses are transformed in three years by the use of climbers. Bourneville's head gardener sees that every house has a different set of vines. Not merely is the plainness soon hidden thereby, but also the individuality of each home is notably increased.

Gardening is compulsory at Bourneville and Letchworth. If a tenant neglects his garden at Bourneville and will not hire some one to weed it, the estate notifies him that he will forfeit his lease unless he makes his place look decent. But there have been only two cases of neglect.

The estate plants a hawthorn hedge all round each man's place, digs and manures his vegetable garden, lays down the lawn, sets out dwarf fruit trees, plants the climbers on his house, and digs his flower-beds. These expenses are considered part of the cost of building and the rent is based thereon. The tenant must keep it in good condition but he can buy plants from the estate cheaper than from a nurseryman and he gets instruction for nothing. There is no chance for a beginner to get discouraged.

A FIVE-ROOM HOUSE FOR $7.80 A MONTH

I am almost afraid to tell how much a tenant gets for his money at one of these garden cities. The cheapest houses at Bourneville rent for only $7.80 a month, which includes taxes and water rates. Such a house contains five rooms and a wonderful "folding bath" which stands up like a cabinet when not in use. Clerks and artisans, however, generally pay about $12.30 a month for seven rooms and an eighth of an acre.

The ideal amount of land at Bourneville is one-eighth of an acre, and the average value of the fruits and vegetables produced on such a plot is about $32.24 a year, or sixty-two cents a week the year round. The smallest lots at Letchworth are a twelfth of an acre, which is the same as 25 x 145 feet, and is 45 percent larger than the typical New York lot, on which many families are allowed to live. In addition to these direct benefits the tenant gets a chance to play cricket, tennis, bowls, quoits, and hockey near by at no expense or at less cost than in an ordinary club.

All rents at Bourneville are figured at 8 percent of the cost. Taxes, insurance and repairs cost 3 percent, leaving a profit to the Bourneville estate of 5 percent. With this 5 percent, it employs a permanent staff of about one hundred builders and has about fifty houses under construction all the time.

OBSTACLES OVERCOME AT LETCHWORTH

The Letchworth company had its hands full with public works, for it had to construct eight miles of road, eleven miles of sewers, and seventeen miles of water main. Also it had to build a reservoir for water, a gas making plant, and an electric power station to supply the factories, of which it now has twenty-four. Another difficulty overcome was transportation. The company has cooperated with the railroad so well that its "commuters" can make their thirty-four miles to and from London daily in less than an hour, though most trains require an hour and a quarter.

The income of the land company is partly from the sale of water, gas, and electricity, but chiefly from ground rent. It never sells any land or houses. Ground rent may seem a very small source of revenue, but every man, woman and child in England contributes for ground rent an average of $10.50 a year. The Letchworth company can, and doubtless will, raise the ground rent as its limit of population approaches, but even if it should raise it as high as the average for England, the tenant will pay less than elsewhere, for taxes will eventually be abolished.

Postscript -- a few hours after I posted this, a google alert on ground rent brought me a story about Letchworth, at http://www.thecomet.net/news/letchworth_businesses_finally_land_meeting_over_rent_rise_1_2311500

Giving consideration to a just tax

This appeared in the Freeport News, and I thought it worth sharing:

Dear Editor,

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?

– John Fisher

Basic Principles of Ground Lease Agreements – Yes, a Contract!

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.)

Basic Principles of Ground Lease Agreements – Yes, a Contract!.

PUBLISHED: JANUARY 7, 2013  

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.

continue reading

Companies Exploit Tax Break for Asset Exchanges, Trial Evidence Shows - NYTimes.com

Companies Exploit Tax Break for Asset Exchanges, Trial Evidence Shows - NYTimes.com.

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.

Hugh Pentecost, on the connection between crime and poverty

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.

Henry George's chapter in McNeill's "The Labor Movement: The Problem of Today" (1887)

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)

http://archive.org/stream/labormovementpro00mcneiala/labormovementpro00mcneiala_djvu.txt

THE LABOR MOVEMENT;
THE PROBLEM OF TODAY.

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' Brotherhood, Ohio.

NEW YORK: THE M. W. HAZEN CO.
1887.

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 they inhabit.

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 ships.

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 political institutions.

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.

Sprawl is Not a New Problem

Taxing Unoccupied and Unimproved Lands

St. Paul Pioneer Press

reprinted in The American Cooperator, circa 1904

The 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 speculation.

If 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.

 

Who Benefits by Single Tax?

It 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.

"But 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.

Outside 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)

Foresters Fined for Improving Town (1903)

In 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.

Many 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 dilapidated kind.

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.

When 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)

Baltimore Ground Rents -- some history and some principles

Just Taxation

Among 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 benefits. 

A Baltimore Instance

The Public

A 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.

Our 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.

The Earth-for-All Calendar: November 30 -- Rudyard Kipling

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.

— RUDYARD KIPLING, From Sea to Sea, Chap. XXVIII

 

Land Speculation in Rural Indiana

It isn't just urban land that is the subject of speculation.  Rural farmland can also be speculated upon, to the private benefit of individuals, and the loss of ... the rest of us, the community!   

 

http://www.indystar.com/article/20121110/NEWS05/211100339/StarWatch-investigation-State-paid-twice-what-some-69-land-worth

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!

Corn Belt Farmland: The Newest Real Estate Bubble? : NPR

Corn Belt Farmland: The Newest Real Estate Bubble? : NPR.

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

It's 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.

"We 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.

"This 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."

Diggle 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.

"The 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.

Physics 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.

"Farmland 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."

The 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.

"Amazingly 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."

Trupin 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.

"There's 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.

"We 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

But 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.

"You 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."

Plain 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."

Should 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.

It 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.

"I 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."

Abbie 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

Lower Rents as a City Slogan

  "LOWER RENTS" AS A CITY SLOGAN
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 exhibit was at 29 Union Square.

The Earth-for-All Calendar: September 2 -- Gerrit Smith and Thomas Paine

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.

—THOMAS PAINE, Agrarian Justice (1797),  Paine's Writings, Vol. III,, p. 329.

A Right-to-Life Platform -- 125 years old

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 labor party.   

"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 modern commerce.

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.

The Single Tax -- a succinct 1911 description

THE SINGLE TAX.

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.

source: http://www.gutenberg.org/files/20190/20190.txt

The Handy Cyclopedia of Things Worth Knowing: A Manual of Ready Reference
Joseph Triemens, 1911

The Earth-for-All Calendar: July 27 -- John Morley

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.

Bankrupt in California

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.

 

NYT 99 years ago ... a "Lower Rents" bill in Albany

1913-05-11 Demand Reduction of Building Taxes

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.

Resource Rentals for Revenue -- The 3 R's of fixing our economy

I came across an excellent site at http://www.resourcerentalsrevenue.org, and thought their FAQ page particularly worth sharing.   The links will take you to answers.

We don't HAVE to burden ourselves and our economy with taxes which throw a wet blanket on jobs, on production, on homes.  There is a better way to finance our common spending!

Resource Rentals for Revenue.

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.

1.Understandings

• What’s with all the terminology?
• Won’t the site rent be passed on to the tenant?
• It sounds too simple
• What is the difference between Land Value and Land Price?
• What is meant by ‘unimproved’ value?
• Why is income from land ‘unearned’ income?
• There is no such thing as a free lunch.
• There is no unimproved land value!
• This tax, like a debits tax, ignores two of the basic principles of raising tax
• It’s incorrect to suggest that income derived from holding land or resources out of use is not a productive activity. It is, since it produces income for the owner.

2.Interest Groups

• Will I be better off with Resource Rentals?
• Are resource rentals fair?
• Wouldn’t the wealthy simply find some way of evading it?
• Wouldn’t the wealthy sell up and flee with their wealth?
• Won’t the poor get caught, while the rich escape as usual?
• Would farmers be able to afford the tax?
• How will it affect multinationals (MNC’s)?
• How will it affect lenders and borrowers?
• Entrepreneurs and Manufacturers?
• Exporters and Importers?
• Environmentalists?
• Won’t it fall harder on the prince in his mansion than on the pauper in his hovel?
• How would old age pensioners on valuable sites be able to pay the site rent as suggested?
• What happens to the self-funded or partly self-funded retiree?
• Unemployed adults - currently untaxed but perhaps owning their own home? Will they have to pay as well?
• The investor in a site has taken a risk, and tied up their capital – who else could possibly be entitled to their capital gain?

3.Implementation

• How would such a system be implemented?
• What would happen to Land Prices?
• If resource rentals are such a good idea, why don’t we have them?
• Why would anyone want to own land under this system?
• How do I buy a property?
• If site values fall, won’t revenue fall too?
• How will it curb unemployment?
• Wouldn’t we run out of space?
• Who wins; who loses?
• Will pensioners and retirees - currently untaxed but living in their own property, be liable for site rents? Will they be reimbursed for past taxes paid?
• New enterprises - yet to realise any profit but paying tax on the property from which they operate? If you tax them, won’t they fail?
• Why don’t we impose reciprocal import duties?
• What about anti-pollution tax rebates?
• What about a Debits Tax?
• Site Rent for Revenue is a crackpot idea.
• Why put the entire burden of taxation on one area of economic activity?

Good questions -- and good answers!

An Address to the Churches (1899)

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.

The Earth-for-All Calendar: April 23 -- Simon Newcomb

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.

a link and a longer except follow ...

 

Sagacity

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."

Sagacity

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.

Parking Revenue funds "Room for All"

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

 

The Last Remnant of Sorcery

THE LAST REMNANT OF SORCERY

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

Verily We Are a Great People

"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.

Certainly something to think about.

The Unearned Increment -- Unearned By Whom?? Earned by Whom?

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.

The Unearned Increment, and Land Speculation

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.

Bob Andelson: The Earth is the Lord's!

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.

Henry Ware Allen: Special Privilege

Special Privilege

BY HENRY WARE ALLEN
from Land and Freedom, 1938

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.

The Land Questions: #35 -- the land in the path of progress (1)

a bit out of sequence ...

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).

G. Your suggestions?

The Land Questions: #36 -- the land in the path of progress (2)

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?

The Land Questions: #29 -- Selling the Toll Roads

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.

J. Your suggestions?

The Land Questions: #27 -- Financing a New Subway Line

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.

S. Your suggestions?

 

The Earth-for-All Calendar: February 24 -- Cadwalader Golden

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.