Remembrances From Movements Past
|December 3, 2009||Posted by Jeffery J. Smith under Progress Report, The Progress Report|
Remembrances From Movements Past
This Land Is Your Land
Do we have to lose income in order to fund government services? Not if we hearken to our past. This 2009 article is from Miller-McCune, Oct 21, on venerable reformer Henry George.
by Michael Scott Moore
An American journalist from San Francisco named Henry George wrote a radical work of political economy called Progress and Poverty, which became a bestseller. He argued for a “single tax” on the value of land. The book made him world-famous near the end of the 19th century, and figures from Tolstoy to Einstein declared their admiration.
Land, to George, was the resource for earning money — or just living; only hoboes could get by without renting a slice of it. Land was not just natural but limited, so it belonged, in the truest sense, to the nation.
Other taxes put an undue burden on human activity: Income tax weighed on productivity (wages and profits); a sales tax put a burden on trade; a “property tax,” which involves not just land but the structures on top of it, burdened development.
In a booming city, land values rise with the tide of human activity, so the power of a government to build subways and schools would rise, too. At the same time, a land tax would curb speculation. If a bank had to pay for sitting on acreages of unused land as an investment, or on every new high-rise apartment building it financed, real estate bubbles would vanish. The most recent recession started as a real estate bubble, of course, so George has a painful new relevance.
But he’s been out of favor for decades, especially in graduate schools. Economists are trained to ignore him. Paul Krugman came to Berlin in 2008, right when the subprime crisis had started to rumble, and I asked his opinion of Henry George. ” Believe it or not, urban economics models actually do suggest that Georgist taxation would be the right approach at least to finance city growth. But I don’t think you can raise nearly enough money to run a modern welfare state by taxing land.
Professor Mason Gaffney at the University of California, Riverside, says that’s the wrong way to imagine a Georgist tax. “Land,” first of all, can apply to any natural resource. Alaska recovers oil revenue and hands out checks to its citizens; the cheap use of the airwaves by broadcast corporations has long been considered as a wholesale giveaway of “land.” The list could go on.
“The biggest thing is water,” Gaffney says. “In an arid state, water is worth more than land, or at least as much. It’s an enormous source of revenue that’s not being taxed at all. In fact, it wouldn’t even have to be a tax because, legally speaking, the state [of California] owns all the water. … So the state should simply charge a rental for the use of its water. But not only does it not charge for people taking water out, it subsidizes them by paying for the works that are necessary to store and distribute the water.” I think the relevant term is “ass-backwards.”
Americans argue about their income tax and whether some of it should help complete strangers cover their medical costs. Europeans still believe in taxing the rich to help the poor. Henry George sidestepped this argument altogether by holding income inviolate and the value of nature as a boon for all.
JJS: The Georgist movement was a strong current in American political waters for decades after Georges death. Reader Ed Dodson sent along these remembrances.
The Sep-Oct 1937 issue of Land and Freedom included this by long-time Single Taxer Billy Radcliffe of Youngstown, Ohio:
President McKinley spoke once in Youngstown and commented on the Single Tax, speaking of it as “a tax on land.” Billy Radcliffe asked permission to correct the speaker. “The Single Tax is not a tax on land,” he explained, “but a tax on land values.” Mr. McKinley, who was always oracular and solemn, replied with a self-satisfied air, “Well what is the difference between land and land values?” and Billy shouted at the top of his voice, “The value.”
The audience saw the point and responded with loud applause, much to Mr. McKinley’s discomforture.
The Mar-April 1938 issue of Land and Freedom reprinted this brief article from Barons National Financial Weekly, March 14, 1938:
The question which Mr. Wallis, not without justice, calls burning that of land taxation. For more than a century many economists, notably Henry George, have pointed to the paradox which exists between heavy taxation on productive industry while unimproved and is left relatively lightly taxed. Mr. Wallis brings these views to date; his original contribution is that he points out how now, all times, when business is already under a crushing tax load, this problem has become vital. Caught between the double burden of taxation and high ground rents, business should demand relief and insist on a shift of a greater part of the tax load to non-productive property. Baron’s National Financial Weekly, March 14.
Jeffery J. Smith runs the Forum on Geonomics.
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