single tax

Editorial
single tax

The Twice-Single Tax

by Fred E. Foldvary, Senior Editor

A tax on land rent and only on land rent was advocated by the American economist Henry George. In his most important book Progress and Poverty, and then other books Social Problems, Protection or Free Trade, The Land Question, and The Science of Political Economy, Henry George explained how taxes on productive activity hurt the economy, whereas a tax on land rent actually helps the economy while providing revenue. Taxing rent helps by preventing the speculation on real estate that then prices it out of reach for new investment, which results in a depression.

George also explained that the tax on land rent is different from other taxes in that it is a payment for the services attached to territory, whereas taxes on income, sales, and goods have little relationship to government services. The taxation of land rent is a tax in form, but not in substance. Since George advocated eliminating taxation in substance, people called it the "single tax" and George said that was an good name for it. The "single tax" movement became popular in the latter 1800s.

So why is the title above the "twice-single" tax? Because a tax on land rent is "single" in another way. Consider what happens if government builds a subway. Land values rise downtown because there will be more commerce, and land values rise in the suburbs because it is now much easier to commute to downtown. So people are paying higher rent or mortgage payments in order to be located where the subway is. But they also paid for the subway in the first place with taxes, since it was financed mostly from taxes that come from their wages. Folks pay twice for the subway, first through taxes, and then through rent. If the tax is the rent, then people only have to pay once.

Therefore, the single tax is single in being a single payment for government services, rather than the double payment that takes place when wages and profits are taxed. A tax only on rent is a twice-single tax, single in terms of there being only one type of tax and single in being only one payment for government services.

Aside from not being a burden to growth and enterprise, there is another benefit from the rent tax in being single. With only one tax, people can tell just how much they are paying for government. With today's 101 different taxes, many of them indirect and hidden, nobody knows how much they are paying for government. Very few people add up all the sales taxes they pay, and few have any clue as to how much more they pay for goods when taxes on businesses are passed on to the consumers. This creates what economists call "fiscal illusion." Taxes are a lot higher than most people think.

Since land can take several forms, the "single" tax is really a single family of taxes, all based on the same principle. For example, some lands are valuable because they are located in the city, the value coming from commerce. Farm lands are valuable because of the fertility, including the climate, as well as due to available transportation. The value of mineral lands comes from the value of the natural materials in the ground. But the rents from all these lands have the same characteristic in having a value not created by the owner and unable to run away when taxed.

In my experience in teaching and talking about taxes and land, most people are in favor of shifting to the single tax once they learn about it. We can blame the greed of those owning a lot of land for blocking the tax shift, but the majority, who would benefit from the shift, are not agitating for it, because of ignorance and apathy. Education is the key to adopting the single tax, making it known to enough people so that once again a single-tax movement can become a popular political force that would not be easy to ignore.

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Copyright 1998 by Fred E. Foldvary. All rights reserved. No part of this material may be reproduced or transmitted in any form or by any means, electronic or mechanical, which includes but is not limited to facsimile transmission, photocopying, recording, rekeying, or using any information storage or retrieveal system, without giving full credit to Fred Foldvary and The Progress Report.